Flipping It
The trials and travails of real estate investment in today's treacherous market
By Mark Talis |
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Over the last few weeks, I have been receiving some very interesting calls from investors. This is an entirely different piece of the real estate market. Five years ago, you could get into a property at a decent price, slap some fresh paint on it, throw in some new flooring, and sell it for a profit. Folks, it's not quite that simple now. Investors, especially new investors, need to have an understanding of what it takes to make things work.
The investor looking to buy a property, fix it up, and sell it must now hold out for a great deal on the property. Not a just good deal, but an amazing deal. They will need to spend some out of pocket money on really improving the house. New kitchen, new baths, upgrade the HVAC, new windows and more - be ready to make some profound improvements. A quick cosmetic fix usually won't cut it in today's market. You can't buy a house on Tuesday and expect to sell it on Friday for a $50,000 profit.
Mark Talis
Here's another good one: "Hey Mark, I'm looking for a rental property, you know - an easy-money kind of investment."
[crash] Sorry, I just fell of my chair, laughing. Easy money - hardy har-har. You people crack me up. Nothing is easy right now. For the casual real estate investor, you had better know what you are about to get into before taking on this experiment. You would have a better chance at making a profit playing in my friend John's monthly poker game. Rental property is a long-term investment. Depending on the deal you get, cash flow may be minimal. Operating costs can skyrocket. When your drunken tenant decides to flush a grapefruit down the toilet, which promptly overflows and floods the bathroom, causing water damage to the entire floor and the ceiling in the room below, you are going to have major expenses to pay. Surprise! This comes out of whatever cash flow you had saved. Also, managing the property can be a hassle, but if you hire a management company, they will charge between 6-8% of rent collected plus a fee for renting the property. This will eat away your savings.
Please don't misunderstand me: investing in real estate correctly and with a solid game plan in place can be an excellent moneymaker. It needs to be done with a complete understanding of the ups and downs that go along with the investment. Do your research, talk to others who have taken the plunge, and don't let the dollar signs in your eyes distract you from the seeing the difference between a great opportunity and a money pit. Stay Trump, not chump!
REMINDER: With summer nearing its conclusion, attitudes in the market are changing. First time buyers hoping to use the $8,000 tax credit need to make a decision. Remember, you need to close by November 30th to get your credit.
Mark Talis
Gledhill Robbins & Talis Group
Real Living HER
730 S High St.
www.marktalis.com
(614) 554-6355
Originally Published: September 1, 2009
